Talks in the fall could make or break historic deal

European Union trade negotiators should be adding Pitbull and Will Smith to their playlists and brushing up their salsa routines.

In October it looks like they’re going to Miami to meet U.S. counterparts for the latest TTIP talks, hoping to put some heat into the slow-as-Florida-molasses negotiations to forge the world’s largest free trade zone.

The talks have not been officially confirmed yet but are expected to take place October 19-23 — a few days after a planned mass rally against TTIP in Berlin.

This would mark the 11th negotiating round since talks on TTIP began in June 2013, but just the second time meetings have been held outside Brussels or Washington.

By moving beyond the Beltway, the U.S. Trade Representative’s office hopes to broaden interest and widen participation at stakeholders’ presentations held on the sidelines of the negotiations.

“To get some new voices, fresh faces and also to open the door to new media outlets,” as Dan Mullaney, the chief U.S. negotiator, put it in April when he hosted the 9th round in New York.

Business groups, seeking a swift conclusion to a deal designed to pump €300 billion into the world economy, are also hoping the move to Miami will inject some fresh momentum to the negotiations, which have made little progress in recent months.

Before the Miami meeting, EU Trade Commissioner Cecilia Malmström will fly to Washington in late September for talks with U.S. Trade Representative Michael Froman to set the tone.

Officials at EU headquarters in Brussels want the fall talks to bring clarity to the shape of the final agreement and enable them to move on to more sensitive areas like public procurement, agriculture and energy.

Tight timetable

There’s hope another full negotiating round can be squeezed in before the end of the year — in Brussels.

Yet expectations for significant progress in October are low, not least because the U.S. is preoccupied with the stalled negotiations for TTIP’s Pacific counterpart, the Trans-Pacific Partnership (TPP).

Ministerial level Trans-Pacific Partnership talks broke down in Hawaii in July as the 12 TTP countries squabbled over Japanese cars, New Zealand butter, Australian sugar and a range of other sticking points.

Pacific rim governments are hoping to resume the talks soon with the aim of wrapping up by the end of 2015.

Until they do, the Europeans claim TTP is having a freezing effect on TTIP.

Officials say the U.S. is unwilling to make compromises in the TTIP talks, fearing that it could complicate the conclusion of TTP by encouraging Pacific nations to hold out for concessions similar to any won by the Europeans.

All of which is making it increasingly unlikely that negotiators will be able to stick to the TTIP time schedule of reaching the outline of a deal by the end of this year, and wrapping up before the Obama administration ends on Jan. 20, 2017.

“Getting a skeleton by this autumn is hopelessly unrealistic,” says Olof Erixon, director of trade policy at the Confederation of Swedish Enterprise.

“I never thought that they would be able to reach anything more than a tentative result by summer of next year, but now they will have to continue into the autumn of next year,” he added in a telephone interview from Stockholm.

The fear is that the longer talks drag into 2016, the more they’ll become entangled with the U.S. presidential election campaign. If the deal isn’t wrapped up before January 2017, the whole process will be further muddied by the change of administration in Washington.

TTP has not been the only hold-up.

Faced with a wave of protests over investor protection clauses — the dreaded Investor-State Dispute Settlement (ISDS) mechanism — the European Commission took the issue off the table this year while it held a public consultation.

Legal standing

Critics say ISDS, which allows corporations to challenge national laws in secretive arbitration panels, is a threat to democracy.

The Commission on Wednesday presented a revised system based on European Parliament demands for an open, judge-based tribunal to replace ISDS panels. Malmström is taking the proposal to EU governments and the European Parliament for approval before presenting it to the U.S.

The talks have also been slowed by the more mundane issues that commonly crop up in trade parlays: trimming tariff levels or agreeing on how dangerous chemicals should be labeled, opening e-commerce markets, or deciding who has the right to call their cheese parmesan.

Prospects for progress were boosted in the summer when the U.S. Congress passed the Trade Promotion Authority (TPA) or “fast-track” bill making it easier for the Obama administration to negotiate both TTIP and TTP. A few weeks later the European Parliament gave a green light for Malmström’s team to continue the talks.

“There is considerable interest on both sides to not let this slip beyond the end of the administration,” says Daniel S. Hamilton, executive director of the Center for Transatlantic Relations at Johns Hopkins School of Advanced International Studies.

“The timing is bearing down on them now, the notion that they try to get the basic agreement done before the end of the Obama administration is becoming the focal point,” he told POLITICO from Berlin. “They have to use the fall much more seriously than the earlier part of the year.”

European officials are hoping the Florida meeting will move negotiators closer to resolving differences on import tariffs and reopen discussions on the ISDS issue based on the Commission’s proposal.

They also want to start talks on politically charged areas.

That would include giving firms from both sides greater access to the other’s public contracts markets — the world’s biggest, worth a combined €3 trillion; agreeing on rules for opening up markets in services like telecommunications, transport, finance and utilities; accessing energy and raw material markets; and the trickiest of all: agriculture.

No government likes upsetting powerful farm lobbies.

From U.S. gripes over EU agricultural subsidies to European worries about U.S. food safety and deep-seated differences over the protection of traditional foods and drinks, the gulf between the two sides is huge. In private, officials acknowledge that whatever shape TTIP finally takes, it will fall well short of creating a free trade area in farm goods.

The question of granting geographical protection for products is particularly thorny.

In Europe, only wines produced using age-old techniques in the northern French region of Champagne can be sold under that name. Thousands of products enjoy similar protection — from Greek feta cheese to ham from the Italian city of Parma.

California port vineyards, parmesan-producing Wisconsin dairies, or the ham curers of Bayonne, New Jersey, could all have to re-label their goods if European geographical indicator rules are extended across the Atlantic.

Europeans see such rules a key to protecting rural heritage and food quality. Any weakening would add to the already widespread public unease over TTIP, especially in France, which is always wary of opening up trade and has a fiercely protective farmers’ lobby.

Concern over TTIP among Europeans, however, goes beyond the usual suspects.

A poll carried out for the Commission in late 2014 showed 58 percent of EU citizens backed negotiations for the free trade deal, but that figure fell to just 39 percent in Germany — the EU’s biggest member and a traditionally strong supporter both of transatlantic ties and free trade.

Public support will be crucial in ensuring TTIP comes into force. If the end deal is as sweeping as supporters hope, it will need to be ratified by parliaments in the EU’s 28 member countries, as well as the European Parliament and U.S. Congress.

That could be tricky if opponents succeed in mobilizing mass demonstrations against a deal. Anti-TTIP groups are already planning petitions in countries such as Hungary and the Netherlands, where the right number of signatures can force referendums.

Security impact

Despite the hazards, European governments are pushing the deal. The reasons aren’t just economic.

Some fear a breakdown of TTIP talks would damage transatlantic ties and weaken NATO at a dangerous time. Western failure to set investment and trade benchmarks could increase China’s influence over rules for the international economy down the road.

“What I regret in the German debate is that so much is said about ‘chlorine chickens’ and too little about the geopolitical significance of this accord,” Germany’s vice chancellor Sigmar Gabriel told a conference in Berlin this year. “Germany and Europe could come under pressure through developments in other parts of the world,” if TTIP fails.